A client sent an email earlier this week regarding Monday’s posting that simply asked two questions:
“Why does any of this matter? Why should I care about the differences between stakeholders & shareholders?”
Great question, dear client! Your fabulous question has prompted this posting on the top three reasons that the stakeholder / shareholder distinction matters.
1. Understanding this distinction allows you to include more people in your business in a meaningful and productive way. While shareholders will always have a financial interest, stakeholders are often motivated by non-monetary rewards. For example, a stakeholder may be motivated by (i) the prestige, honor or cache of associating with you and your business; (ii) your connections to centers of influence or a particular center of influence that is of interest to the stakeholder; (iii) the stakeholder’s personal need to mentor and give back or (iv) the personal pride that a stakeholder gets from helping another person with a shared background or similar interests succeed.
2. Appreciating this distinction can encourage you to be creative when creating incentives to get folks interested in committing to the sustainable growth of your business. The realization that a financial return is not the only incentive of potential supporters allows you to develop all types of incentive levels that are designed to encourage others to support your goals and objectives.
3. Similar to number three, appreciating this distinction provides an incentive for you to expand your organization structure. You are free to consider how various board structures (i.e., advisory, honorary, operational, “friends of” , etc. ) can help you achieve your performance and profitability goals at an accelerate rate.
We hope this helps to explain the importance of this subject. Let us know if we can help you along the way.
Until next time … Take GREAT Care!
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